Called off: PBS-2 service for overlap stations

Published in Current, Feb. 21, 2000By Karen Everhart Bedford

PBS announced this month that it dropped plans to launch PBS-2, a proposed start-up channel for smaller overlap stations that's been under discussion since 1997. Acting program chief John Wilson cited lack of funding for the venture and waning interest among PBS members in making the alternative service part of their multichannel menus.

"As we looked to what stations were asking of us, we prioritized our endeavors and focussed on those that would provide the most service to member stations, it didn't seem that PBS-2 was something that we could try and make happen," Wilson said during an interview last week.

"It's a shame that CPB spent money on a feasibility study that had positive results, and PBS decided not to move forward," said Mel Rogers, president of KOCE in Huntington Beach, Calif., who co-directed the PBS-2 research. "PBS has a right to make that decision," he acknowledged. But Rogers questioned why the decision was made under interim President John Swope instead of incoming PBS President Pat Mitchell.

Rogers and WLIW President Terrell Cass, heads of two major overlap stations in the Los Angeles and New York markets, are pursuing plans to develop another service, which both declined to discuss in detail. Cass predicted it would be financed through sales of 30-second underwriting spots.

CPB's Television Future Fund invested "just under" $1 million in research on PBS-2 and related subjects over the last three years, according to Doug Weiss, v.p. of television. PBS-2 planning was initiated by PBS and the Program Resource Group, an affinity group of small public TV stations in overlap markets that sought to strengthen and differentiate their broadcast services. The project was welcomed as a means to help distinguish the offerings of the overlap stations, to resolve long-festering intra-market rivalries and to address congressional complaints that it's wasteful to have overlapping stations in a market.

The project also attempted to answer broad strategic questions about what audiences PBS can effectively serve in the multichannel environment, and the business models necessary to launch new services, said Weiss.

Initial findings were positive enough for PBS and PRG to sketch out a three-night-a-week niche service for aging baby boomers that would be available to all PBS stations, although PRG affiliates would get first use of all programs. Opposition to the strategy from executives at big overlap stations began to soften after talks about control of the channel achieved a preliminary consensus.

Last spring, a full-blown business and programming plan for the channel projected that PBS-2 could launch on a low-cost program budget averaging $20,000 per hour, with total expenses running at $5 million to $8.8 million annually for the first six years. Station program fees would decline as increased ratings boosted underwriting revenues, and PBS-2 would begin operating in the black after its sixth full year. Derk Zimmerman, a former Group W and Fox Broadcasting executive, developed the plan with Hope Green, former president of Vermont PTV.

But by summer, PBS-2 became a lower priority at Braddock Place as programmers raced to launch two other channels as spin-offs of existing signature content, PBS Kids and PBS You.

"As time went by, as the idea fleshed out and became embedded, other events took place," explained Wilson, referring to the launch of PBS's two new digital channels. "For those stations looking for something for their analog cable channels or for potential use in their conversion to digital, those stations now had more options than when PBS-2 was first conceived. In some ways, it made the challenge of PBS-2 greater in terms of carriage and the usefulness of it."

The PBS Board's Program Policy Committee required that PBS-2's launch be fully financed through outside backing, noted Wilson. "Financial implications are the prime drivers here," he said. Examining start-up costs and potential customers and "whether it makes sense in the end" is all part of doing a feasibility study.

PBS did examine various scenarios for launching the second service with outside backing, one of which was forging a partnership with a dot-com company. The combination might have resulted in a cutting-edge convergence of television broadcasts and Internet content, but PBS concluded "a dot-com would want something that would be a full channel, rather than a program service provided to stations for specific dayparts," Wilson explained. "It became clear we were talking about a whole different animal."

Discussions about the plausibility of a dot-com partnership for PBS-2 were theoretical, said Wilson, and to his knowledge were not based on negotiations with specific companies.

The decision to drop PBS-2 was made jointly by Wilson and Swope. "I presented the options on how we could continue to pursue PBS-2 and it became clear that, given station feedback of late and the environment we're operating in now, the best thing to do is to focus our efforts on providing the most benefits to the most member stations."

"It's fair to say we're disappointed in the outcome, for two reasons," acknowledged CPB's Doug Weiss. "We believe we're in the midst of negotiating questions about our multichannel strategy for the future, and we need to take this issue on squarely." A group of stations and a national organization raised their hands and volunteered to take on tough questions about how public TV can effectively compete in a shifting media environment. "We have to think about how we get out there, understanding that we don't have all the answers," he said.

Conversations over PBS-2 among stations "seemed to map against the wrong set of questions," Weiss added. "It got caught in the weeds of being seen as an overlap issue. In the multichannel, digital environment, we're all overlaps. If we don't find a positive solution to optimize the value that stations create in their communities, then we're missing the boat."

Creation of a separate and more attractive program service is especially crucial to overlap stations as they plan for their digital conversions, said Rogers. "Inevitably, stations' digital conversions will not happen all at once. Small stations especially will get their transmitters up first, but won't have their master control built out for some time because it's very expensive." These same stations purchase their PBS programs under a discount plan that imposes an eight-day delay on their broadcasts of PBS fare. "When digital comes with pass-through ability, what will we have to pass-through? If it's only an eight-day delay of what everyone else is doing, that's not a very compelling thing."

"Stations that don't have a relevant and strong service will find it hard to get carriage on digital cable systems," Rogers continued. "We need a national service of our own."

Discouraging duplication

During its recent retreat and annual meeting in Key Largo, the PBS Board finalized two other policies affecting overlap stations, or those that aspire to launch new ones.

Special rules for purchases of PBS Select programs by stations in overlap markets, which were negotiated by after an angry dispute between competing primary-service and secondary-service stations in 1997, were formally adopted by the Board. The rules resolve disagreements over pricing and exclusivity of programs offered through PBS Select — PBS's a la carte syndication service — and have been in effect on a trial basis for a year.

The board also ended a one-year moratorium on admitting new member stations. Its revised admission policy asserts that since PBS is now universally available throughout the U.S., the board will limit the admission of new member stations to those that can prove:

that their Grade A coverage area is substantially unserved by a PBS member station and "local service and viewer benefits in the applicant's community would be substantially enhanced" by its admission to PBS;

that the applicant has "exhausted all avenues for allying or affiliating with the PBS member station(s) that currently provide service in the applicant's community;" and

that the applicant meets criteria as a noncommercial educational TV licensee providing a nonsectarian, nonpolitical program service, and can afford the costs of PBS membership.

Overlapping stations in biggest metro areas

Only some of the overlapping public TV stations were
interested in the PBS-2 service. Some others deliver the main PBS service
to nearby states or cities. And some specialize in instructional programs.